RE:RE:ShortsI thought it'd be helpful to understand what a bought deal is/means. Quisitive gets the guaranteed amount they're looking for. The underwriters obviously think they can sell the shares over time at a profit. Two things will help the underwriters Nov 22's quarterly numbers if they're good and second the announcement of an LP deal with Visa or MC or both.Obviously these two things will also help Quisitive as well. As to the purchase it seems like a very reasonable price at approx. one times revenue. Be patient. Of course here on Stockhouse that's probably a bad word.
What Is a Bought Deal?
A bought deal is a securities offering in which an investment bank commits to buy the entire offering from the client company. A bought deal eliminates the issuing company’s financing risk, ensuring that it will raise the intended amount. On the flip side, taking this approach, rather than pricing the offering via the public markets with a preliminary prospectus filing, usually results in the client firm getting a lower price.
KEY TAKEAWAYS
- A bought deal occurs when an investment bank agrees to purchase an entire issue from the issuer, and then resell it after.
- A bought deal usually favors the issuing company in the sense that there is no risk to the financing—the company will get the money it needs.
- The investment bank takes on extra risk in carrying out a bought deal because it must be able to sell the securities—ideally for a profit.
- Bought deals essentially put the investment bank long the company stock while also tying up capital. In return for taking on this risk, the investment bank usually gets the securities at a discount to the projected market value.